Focus on tourism to help economy

By Tu Jenn-hwa 杜震華

Taiwan’s economy is affected by the overall global economic climate and this is something that cannot be turned around overnight. Taiwanese have gotten used to living in comfort and do not like the prospect of having to tighten their belts. The press, too, has been fanning the flames, lambasting the government for being “unfeeling” and “indifferent” when it is trying to do its best. Mid to long-term projects are unlikely to set the public’s mind at ease and short-term measures have all but been exhausted, so the situation is not going to improve any time soon.

One possible option is to concentrate on international tourist traffic. This kind of transnational traffic tends to have deep pockets and is happy to splash the cash. All that is needed is to offer the incentives to get them to do so. Therefore, companies and the government could look into ways to get these international arrivals and transit passengers to part with their cash.

In the past, we have concentrated on the number of foreign tourists coming to the country and the press have reported new trends and records set in this regard. Further examination reveals, however, that it is the “quality” of international arrivals that is more important. This is because consumption levels are more directly related to an individual traveler’s economic means than anything else.

Statistics bear this out. In 2010, France had the highest number of international arrivals, at 77.15 million, followed by the US with just under 59.8 million. However, revenue from international arrivals in the US was, at US$165.8 billion, considerably higher than the US$56.7 billion spent in France. That is to say, the average foreign tourist in France spends US$735, compared with an average of US$2,773 spent in the US. There are many factors that account for the higher average expenditure in the US by foreign tourists, including longer stays, a higher number of items purchased and the amount of money spent at tourist attractions.

If you look at the amount of international traffic Taiwan receives, you can see that we fall well behind our neighbors. In 2010, for example, we had a total of just under 5.6 million visitors from overseas, compared with just under 24.6 million for Malaysia; over 20 million for Hong Kong; a little under 16 million for Thailand; just over 9 million for Singapore; 8.8 million for South Korea; somewhat over 8.6 million for Japan and 7 million for Indonesia.

In terms of revenue for that year, Taiwan did better than Indonesia, earning US$9.2 billion compared with Indonesia’s US$7.6 billion, but there is still a way to go before we are up to the level of earnings of Malaysia, Hong Kong, Thailand, Singapore, South Korea and Japan, which generated US$18.3 billion; US$27 billion; US$23.4 billion; US$14.2 billion; US$13.8 billion; and US$15.4 billion, respectively.

Foreign tourists spend, on average, US$1,600 here. This is second only to the average spent by foreign tourists in Japan, whose average expenditure is NT$1,790. It is consistently higher than the figures for our neighboring countries. If we want to take this up a level, we can do two things: First, improve the existing facilities to attract more tourists and secondly, make it so the average expenditure of visiting tourists continues to rise. The figure of US$9.2 billion represents 2 percent of Taiwan’s GDP. If we can get this to double, it would mean a 1 percentage point increase in our economic growth rate. Of course, this assumes that all of the money is spent on domestically produced goods and services, but even if half of them are made here, that still means a 0.5 percentage point increase.